clariant corporation case
TRANSCRIPT
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CLARIANT CORPORATION
CASESUBMITTED BY:HUNNY GOYAL
PARTH SHAH
NILAY THAKKAR
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Introduction
Clariant international limited was formed in 1995.
It formed with the spun off of three acquisitions.
These divisions are Sandoz with sales of approximately 1.5 billion.
Hoechst-Celanese added to mix in 1997 with sales of 5.5 billion.
NAFTA region accounts for 1.1 billion.
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Clariant 6 Global Divisions
TLP( textile, leather, paper) chemicals for process
P&A( Pigments and Additives) makes colorants and functional additives
FUN( functional chemicals) produces a plethora and magic molecules
LSE ( life sciences and electronics) its serves the need of electronics and
pharmaceuticals industries
MB ( master batches) custom blends pigments and other additives for colorplastics
CEP( cellulose ethers and polymeriser) provides special feed-stock chemicalsplastics processing
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Chemical Industry Background
Two type of chemicals are available-
1.Commodity chemical
2.Specialty chemical
Commodity chemical stand as a daily utilized kind of product including
chemical which holds for 83% of total market share.
Mature Commodity market are primarily driven by price, service, technicalsupport, company relationship.
Specialty chemical are often willing in invest in research and development ofperformance and cost to meet the immediate need.
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Specialty Chemicals
This is the field in which the Clariant corporation are doing business
Specialty chemicals are used in many products we encounter every day.
like,-
1.Pigments in paint
2.Plastic
3.Leather in cars and in Cosmetics
4.Photo-resists in video Displays
5.Agro Chemicals for food etc.
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Problem Finding
In Sep 2000, when VP Vincent Thompson of Clariant Corporation gone throughthe Sales growth & Contribution growth margin of the NAFTA arm of Clariant
he was frowned by seeing the continued volatility in their most promisingbusiness area.
He ended his review with the question of how Clariant could fully developtheir potential in meeting their goals of Sales & Contribution margin.
Vincent Thompson wanted to redefine the Marketing & Sales to tackle suchissue by Redesigning their sales force into cross-divisional account teams thatcould be assigned to companys most profitable customers which going to cost
their time & money heavily.
Their employees also suggested him other alternatives like Training, Financialincentives which Vincent is going to consider.
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Cont..
Beside this President of Clariant Corporation, David Lawrence outlined threepronged strategies to achieve both Sales & Profit performances:
A. Sales growth through strategic acquisitions to achieve targeted growth inhigh- margin segments
B. Sales growth generated by cross-divisional sales of multiple Clariant lines
to key, high-potential customers
C. Improving margins by emphasizing sales of higher-margin specialty
products over the more established "semi-specialty" products (those nearingcommodity status).
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Structure of Specialty Chemical Industry
Tier 1
Annual Salesbetween morethan 10
billions. Specializing inSpecificSegments orUser segments.
Tier 2
Annual Salesbetween 3-5billions.
Focusing onParticularportfolio ofspecialtychemicals.
Tier 3
Annual Salesbetween 1-2billions.
They are havingnarrower rangeof productsofferings thanTier 2.
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Cont..
Clariant Corporation fall under Tier 2 Class of industries.
They are in the Precarious situation because they compete fiercely on price
when a major account is up for grabs.
One of our managers characterized our position as being caught "betweena herd of elephants and a pool of sharks."
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Strategies Implementation
In implementing these strategies, especially the cross-divisional salesstrategy. Clariant had invested significant time, energy, and money into the
creation of cross- divisional product understanding among the variousbusiness units. Significant training investments were already being made .in
the various sales forces. Technologies were being implemented, includingcentral databases of product information, product con- tact information,
and "center of excellence teams."
To capture these potential cross-divisional opportunities, whichoften arose from a customer's pressing needs for new approaches toproduct development, a fledgling national accounts system was under
development and had resulted in several promising contacts withhigh-potential customers.
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Marketing & Sales
Sales department is provided as a annual sales objectives that make sense tothe production department to be manufacturing of the products.
And also it make increase the profitability.
Globalization-
They having global business unit, each one having own sales force.
each of that separated with product line, user line , industry line etc. All unit are divided as further geographically.
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Cont..
They having national accounts of the major customer
They donttake the customer like they own customer as a local business unitbecause there is many competitor with various kind of product available.
Salesman of Clariant spent less time to Identifying prospects for new businessfor Clariant beyond product line.
And they spent most time in Generating new business for product line.
Salesman incentives-- Seventy-five percent of our upper-management bonuses are tied to NorthAmerican divisional sales, earnings, return on sales' and net working capitalperformance.
- Twenty-five percent of our bonuses relate to the same performance metricsfor global division
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Cont..
They having national accounts of the major customer
They donttake the customer like they own customer as a local business unit.
Because there is many competitor with various kind of product available
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Customers Expectation
In 2000, Survey of 26 Clariant Customers are revealed the following things:
22 of 26 described closer relationships with the chemical suppliers.
Most of them laid importance on Quality and then on Service and last on
Pricing. Most of also said they are willing to pay more price for the quality &service.
20 of 26 are prefer to work with the current chemical suppliers.
24 of 26 want new & additional product opportunities to come from the
supplier representatives.
On the view of technology advancement, Half replied that they would
purchase commodity chemicals from e-commerce market and they also toldthat technology should facilitate the relationship not to replace it.
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Cont..
Large Clients also want to integrate the supplier into the product-development process to shorten timetables and to streamline problem
solving.
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Thank You